29 May 2009

What Will It Take to End the Recession?

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Mario Rizzo has (as usual) an interesting post over at ThinkMarkets on the possible end of the present recession. I personally am withholding judgment on whether the “recession is over,” as many analysts seem to think. But even if, years from now, the NBER finally decides that yep, the recession lasted from Dec 2007 to May 2009, then I still won’t say, “Good thing we had Bernanke at the helm!” As I commented after Mario’s post:

What is interesting of course is that every recession in history has always ended. So it is odd when people want to find “the cause” for the recovery this time. (I realize you are aware of this, Mario; I’m just elaborating on your post.)

For example, suppose everybody ends up thinking it was TALF. Well, there was no TALF during the last x recessions (I don’t know how many there were in between the Great Depression and now).

I keep coming back to medical analogies. If a kid gets the flu, and each of his five brothers tries a different remedy–like kicking him in the face, pouring syrup on his toes, and reciting limericks–the kid would eventually get better. Some of his siblings’ remedies did nothing, and some actively prolonged the sickness.

Yet after he eventually gets better, the siblings would argue over whose cure “worked.”

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